| Mon 20 Nov 2006, 8:18 | | DataPro Group - Audited Results For The Year Ended |
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DTP
DTP
DataPro Group - Audited Results For The Year Ended 31 August 2006
DataPro Group Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 1998/016433/06)
Share code: DTP & ISIN code: ZAE000058061
("DataPro Group" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2006
- Revenue up 103% to R 196 million
- Operating profit up 385% to R 19 million
- Net profit before tax up 817% to R 17.5 million
- Net profit after tax up 227% to R 12.9 million
- Earnings per share up 123% to 3.8 cents
- Headline earnings per share up 63% to 3.4 cents
Balance Sheet Audited Restated -
as at audited as
31 August at
2006 31 August
R"000 2005
R"000
ASSETS
Non-current assets 206 911 120 987
Property, plant and 29 998 22 552
equipment
Intangible assets, 173 580 93 535
including goodwill
Deferred taxation 3 333 4 900
Current assets 53 150 15 010
Inventories 2 263 137
Trade and other 32 944 12 384
receivables
Taxation - 2
Cash and cash equivalents 17 943 2 487
Total assets 260 061 135 997
EQUITY AND LIABILITIES
Capital and accumulated 192 587 88 059
loss
Share capital and premium 206 914 115 278
Accumulated loss (14 327) (27 219)
Non-current liabilities 14 737 7 246
Long term borrowings 14 737 5 755
Financial liability - 1 491
Current liabilities 52 737 40 692
Trade and other payables 38 140 20 920
Short term borrowings 11 763 13 955
Shareholders" loans - 2 055
Taxation 2 834 1 242
Bank overdraft - 2 520
Total equity and 260 061 135 997
liabilities
Ordinary shares in issue 483 812 314 369
at period end (`000)
Net asset value per share 39.8 28.0
(cents)
Net tangible asset value 3.93 (1.74)
per share (cents)
Fully diluted information
Ordinary shares at period 483 812 316 665
end (`000)
Net asset value per share 39.8 27.8
(cents)
Net tangible asset value 3.93 (1.73)
per share (cents)
Income Statement Audited Restated -
for the audited for
year ended the year
31 August ended
2006 31 August
R"000 2005
R"000
Revenue 196 365 96 901
Cost of sales (114 730) (55 936)
Gross profit 81 635 40 965
Operating and administrative (53 187) (29 274)
expenses
Other operating income 485 244
Operating profit before 28 933 11 935
depreciation and
amortisation
Profit on disposal of assets 53 23
Depreciation (7 181) (6 794)
Amortisation of intangible (2 792) (1 247)
assets
Operating profit 19 013 3 917
Finance charges (3 070) (2 536)
Investment income 230 191
Fair value adjustments (257) 110
Negative goodwill 1 574 225
Net profit before taxation 17 490 1 907
Taxation (4 598) 2 031
Net profit for the year 12 892 3 938
Calculation of headline
earnings
Net profit for the year 12 892 3 938
Adjustments for:
Initial listing costs - 1 010
Profit on disposal of assets (53) (23)
Negative goodwill (1574) (225)
Tax effect of adjustments 15 7
Headline earnings for the 11 280 4 707
period
Weighted average shares in 336 383 228 980
issue (`000)
Earnings per share ordinary 3.8 1.7
share (cents)
Headline earnings per 3.4 2.1
ordinary share (cents)
Dividend per share (cents) - 1.0
Fully diluted information
Weighted average shares in 336 383 229 209
issue (`000)
Earnings per share ordinary 3.8 1.7
share (cents)
Headline earnings per 3.4 2.1
ordinary share (cents)
Abridged Cash Flow Statement Reviewed Restated -
31 August audited
2006 31 August
R"000 2005
R"000
Net cash inflow from operating 17 092 659
activities
Dividends paid - (2 290)
Net cash outflow from (58 360) (96 116)
investing activities
Net cash inflow from financing 59 244 97 704
activities
Net increase (decrease) in 17 976 (43)
cash and cash equivalents
Bank (overdraft)/balance at (33) 10
beginning of year
Cash and cash equivalents at 17 943 (33)
end of year
Statement of Share Share Accumulated Total
Changes in Capital premium Loss
Equity R"000 R"000 R"000 R"000
Balance at 01
September 2004
- As 75 23 498 (31 255) (7 682)
previously
reported
- Prior year - - 631 631
adjustment
Restated at 01 75 23 498 (30 624) (7 051)
September 2004
Change in - - 1 757 1 757
accounting
policy
Issue of
shares
- For
acquisition of 67 5 586 - 5 653
DataPro (Pty)
Ltd from
management
- For cash 87 48 037 - 48 124
Write off of - (2 390) - (2 390)
share issue
expenses
- For the 85 44 915 - 45 000
acquisition of
@lantic
Profit for the - - 3 938 3 938
year
Dividend paid - - (2 290) (2 290)
Equity arising
on acquisition - (4 - (4 682)
of @lantic 682)
call and put
options
Balance at 31 314 114 964 (27 219) 88 059
August 2005
Issue of
shares in 1 387 - 388
terms of
options
exercised
Issue of
shares in 2 797 - 799
terms of
options
exercised
Write off of - (1 506) - (1 506)
share issue
expenses
Profit for the - - 12 892 12 892
year
Increase in
equity as a - (3 306) - (3 306)
result of
acquisition of
Netralink call
option
Issue of 18 10 156 - 10 174
shares for
acquisition of
Netralink
assets
Expiry of Put - 1 582 - 1 582
Option
Disposal of - 2 897 - 2 897
Call Options
Issue of 129 69 879 - 70 008
shares for
acquisition of
Definity
Issue of 20 10 580 - 10 600
shares for
cash
Balance at 484 206 430 (14 327) 192 587
31 August 2006
COMMENTARY
The board of directors is pleased to present the company"s results for
the year ended 31 August 2006.
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS"). These are the
first annual financial statements in which the company has adopted IFRS.
The date of transition is 1 September 2004. Opening balances and
comparative results have been restated for, inter alia, an adjustment in
terms of IAS16 in relation to the accounting for property, plant and
equipment, which requires that the useful lives of assets and the
estimated residual value of assets be evaluated each year.
The results have been audited by Grant Thornton and their unqualified
opinion is available for inspection at the registered office of the
company.
BUSINESS OVERVIEW AND FUTURE PROSPECTS
Despite a highly competitive and regulated telecommunications
environment, DataPro Group has achieved record results for the year ended
31 August 2006. In financial terms, we achieved record revenues of
R196 million and net profit of R12.9 million, thus more than doubling our
business over the period under review. Our year has been characterised by
numerous acquisitions, growth across all our core businesses, improved
operational efficiencies and a substantial increase in our customer base.
Some of the major successes of 2006 are as follows:
- successful integration into DataPro Group of @lantic Internet
Services, which focuses on the consumer market, with the resultant
increase in its subscriber base from 35,411 to 40,512 subscribers;
- acquisition and integration of the data business of Netralink;
- further expansion and upgrading of our network infrastructure to
support our core data business as well as our VoIP platform;
- acquisition and integration of BizCall, a leading provider of Open
Source based PABX solutions that adds an additional product offering
to our overall telecommunications solution portfolio;
- acquisition and integration of Definity Telecommunications
(Proprietary) Limited (" Definity Telecom"), a leading Least Cost
Routing ("LCR") supplier, that further accelerates the growth of our
voice business under VoxTelecom;
- implementation and testing by VoxTelecom of interconnect
arrangements with Telkom and Vodacom, which will be made
commercially available in the next fiscal year;
- growth in the monthly contracted annuity base across the DataPro
Group from R9,5 million as at 31 August 2005 to R24,1 million as at
31 August 2006;
- establishment of our Service Centre, a centralised help desk
infrastructure to provide customer support across our entire
corporate and consumer customer base;
- increase in our staff complement from 128 to 256 employees;
- the strengthening of our shareholder base with a significant
investment in DataPro Group by the Metier group of companies;
- re-organisation of our leadership structure around our core business
units and the strengthening of the senior management team through
the retention of senior personnel through our acquisitions, company
acquisition and the addition of experienced external hires.
These milestones have been achieved without sacrificing profitability and
customer satisfaction. Over the course of the last fiscal year DataPro
Group has, through a combination of strategic acquisitions and organic
growth, been transformed into a major telecommunications service provider
in the South African market. With a potential addressable market of
approximately R40 billion, we believe we have a strong platform from
which to rapidly grow our business.
The full potential of DataPro Group will ultimately be achieved through
our ability to take advantage of deregulation. To achieve this we need to
be able to interconnect with the incumbent fixed line operator Telkom,
the new Second Network Operator, Neotel and the existing cellular service
providers. We are confident that this will become a reality in the next
fiscal year, which will provide a strategic inflection point in the
further liberalisation of the South African telecommunications landscape.
Having anticipated the potential for these changes some years ago, we
have now built the infrastructure and recruited the intellectual
capability to take advantage of this opportunity, which will be to the
ultimate benefit of both our customers and shareholders.
Our strategy to build DataPro Group into the leading, alternative
independent provider of voice and data solutions to the southern African
market is focused on the following key goals and objectives:
- growth of our core businesses organically via channel and direct
sales;
- the acquisition of companies that accelerate our growth strategy in
southern Africa and that are accretive to earnings;
- ongoing investment in our infrastructure and our people to ensure we
continue to deliver innovative, cost effective solutions to all our
customers;
- continuing to focus on operational excellence across all our
businesses, ensuring the delivery of the highest levels of customer
service; and
- ongoing provision of a comprehensive telecommunications solution
comprising voice and data product offerings that can truly deliver
on the promise of convergence.
We are excited about the future and look forward to the challenges and
opportunities that lie ahead. As a group, we believe in setting and
achieving challenging goals and objectives and we are focused on
executing on our strategic vision to the benefit of our shareholders,
customers and employees. We will continue to compete to attract and
retain customers, whilst offering innovative, world-class solutions at
competitive prices. With our established brands of DataPro, @lantic and
VoxTelecom, we are able to deliver a comprehensive portfolio of voice and
data solutions, tailored to meet the needs of our customers, positioning
DataPro Group as the leading independent, alternative telecommunications
service provider in the southern African market.
FINANCIAL OVERVIEW
Revenue, which includes only two months revenues of Definity Telecom,
grew R99.4 million (103%) over the comparative period. Gross margins
remained at 42% for the period, but will come under pressure in the
coming year as de-regulation and competition forces prices down.
Deflation on revenue pricing has been offset by a large increase in the
number of customers and the careful management of operating costs. The
DataPro Group continued to spend on the development of the Voice over
Internet Protocol ("VoIP") offering, with revenues improving in the
second half of the year. Gross profit increased by R 40.7 million (99%)
to R 81.6 million for the year and operating profit before depreciation
and amortisation improved to R 28.9 million, an increase of R 16.9
million or 142%, largely driven by a strong performance in the underlying
businesses and the recent acquisitions.
Operating profit increased by 385% to R19 million and profit before
taxation increased by 817% to R17.5 million. Net profit after taxation
reflected an increase of R8.9 million (227%) over the prior period, to
R12.9 million, with headline earnings increasing by 140% to R11.3
million. Both headline earnings and earnings per share reflected an
increase of 63% and 123% to 3.4 cents and 3.8 cents per share
respectively.
Monthly contracted revenue increased by 130%, to R24.1 million, showing
strong performance in revenue growth in real terms. The monthly
contracted revenue is a combination of annuity based contracts for
@lantic Internet Services, VoxTelecom and DataPro (Pty) Ltd. The core
DataPro ISP revenue (traditional corporate data business) increased from
R80 million to R110 million, an increase of 38% whilst gross margins
increased from 50% to 57%. ADSL continues to grow strongly and gain
market share. The broadband market continues to offer numerous
alternatives to both consumers and the corporate market and this, coupled
with de-regulation, will force pricing down.
VoxTelecom revenue increased from R6.3 million to R36.6 million, a 481%
increase over the prior year. Margins increased as volumes grew and
accordingly start-up costs had less of an impact as expenditure slowed.
Volumes are anticipated to increase significantly in the new financial
year once traffic is passed over the interconnects with Telkom, Vodacom,
MTN, Cell C and other VANS licensees.
@lantic, which provides dial-up and ADSL solutions for the consumer and
SME market under its own brand, continues to contribute positively to the
group with revenue increasing to R45 million compared to R36 million for
the corresponding prior period, representing a 25% increase in annuity
revenue with an associated 14% increase in the customer base year on
year. Gross margins increased from 18% to 28% through economies of scale
and synergies attributable the DataPro Group as a whole.
Capital expenditure for the DataPro Group on customers, premises and
equipment amounted to R5.2 million and R14.7 million on internal
expenditure consisting of equipment, furniture and fittings and motor
vehicles as at 31 August 2006.
With effect from 07 July 2006, DataPro Group acquired Definity Telecom, a
least cost routing ("LCR") company focused on medium to large
enterprises, with annuity revenues of approximately R8 million per month.
This acquisition is expected to contribute positively to earnings and the
annuity book in the future. In accordance with IFRS3, negative goodwill
of R1.5 million relating to this acquisition and the acquisition of
Netralink, has been taken to the income statement.
Prior to the year end, DataPro Group sold its call option on shares
issued to the vendor of @lantic to Metier Investment and Advisory
Services (Proprietary) Limited and the call option was immediately
exercised. Accordingly, the put option against DataPro in respect of the
same shares was extinguished prior to year end, which has resulted in the
write back to equity of prior charges in relation to the financial
liability.
The aggregate effect of the adoption of IFRS is set out below:
As Effect of Other IFRS
previo transition R"000 R"000
usly to IFRS
report R"000
under
GAAP
R"000
There was no effect on equity as reported at 1 September 2004.
Reconciliation of equity
at 31 August 2005
Property, plant and 26 852 (1 640) (2 660) 22 552
equipment
Intangible assets 94 088 20 (573) 93 535
Deferred taxation 3 496 527 877 4 900
Total non-current assets 124 436 (1 093) (2 356) 120 987
- -
Receivables 12 523 - - 12 523
Cash and cash equivalents 2 355 - 131 2 486
Total current assets 14 878 - 131 15 009
Long term borrowings 5 755 - 1 490 7 245
Tax payable 858 - 384 1 242
Other payables 39 092 - 358 39 450
Total liabilities 45 705 - 2 232 47 937
Share capital and premium 119 960 (4 682) 115 278
Accumulated loss (26 351) (1 093) 225 (27
219)
Total equity 93 609 (1 093) (4 457) 88 059
Reconciliation of net profit for the year ended 31
August 2005
Gross profit 40 965 - - 40 965
Other operating 354 - (110) 244
income
Operating and (35 672) (1 620) -- (37 292)
administrative
expenses, including
depreciation and
amortisation
Operating profit 5 647 (1 620) (110) 3 917
Investment income 191 - - 191
Finance charges (2 536) - - (2 536)
Fair value - - 110 110
adjustments
Negative goodwill - - 225 225
Profit before 3 302 (1 620) 225 1 907
taxation
Taxation 1 504 527 - 2 031
Net profit for the 4 806 (1 093) 225 3 938
year
SEGMENTAL REPORTING
The company does not separately identify assets, liabilities or expenses
attributable to different segments of the business and accordingly the
only segmental information available is turnover, details of which are
set out below:
Segment R"m
Data (ISP and ADSL) 114
@lantic (ISP and ADSL) 45
Voice (VoIP, LCR and Call- 37
Back)
Total 196
ACQUISITIONS AND ISSUE OF SHARES FOR CASH DURING YEAR
Prior to the reverse listing of DataPro Group, Vantage Capital Group
("Vantage"), a BEE shareholder in DataPro Group, was granted an American
call option to subscribe for up to 2 295 641 new ordinary shares at an
exercise price based on the 30 day weighted average share price
immediately preceding the exercise of the option, less a 10% discount,
exercisable on or before 31 August 2006. During the period under review,
this call option was purchased by DG Reed and JC Herbst through the
transfer of shares to Vantage, whereby Vantage increased its shareholding
in DataPro Group. The option was then exercised as follows:
* 766 744 ordinary shares at 50.6 cents per share, being a 10%
discount to the 30-day weighted average share price as at 25 January
2006;
* 1 528 897 ordinary shares at 52.2 cents per share, being a 10%
discount to the 30-day weighted average share price as at 21
February 2006
DataPro Group acquired the business of Netralink with effect from
1 January 2006. The consideration for the acquisition was R10 175 000 to
be settled by the issue to Netralink of 18 500 000 ordinary shares at an
issue price of 55 cents per share.
With effect from 1 March 2006, DataPro Group acquired the business of
Bizcall for a purchase consideration of R1 080 000, payable in cash over
a 12 month period. The acquisition provides for an additional payment in
the event that profit after taxation exceeds R750 000, such that any
excess above R750 000 will attract a price: earnings ratio of 2 times
earnings and will constitute an increase in the purchase price of the
investment. Bizcall is a strategic acquisition for DataPro Group as the
company provides PABX solutions that are integrated with VoxTelecom"s
VoIP strategy.
DataPro Group acquired Definity Telecom with effect from 07 July 2006.
The consideration for the acquisition was R70 000 000, which was settled
through the issue of ordinary shares at issue prices of between 53 and
55.4 cents per share.
On 31 August 2006, it was agreed that share options would be allocated to
key DataPro Group staff. A total of 27 300 000 new ordinary shares have
since been offered at a strike price calculated at a 10% discount to the
5 day weighted average price (VWAP) of DataPro Group securities as at 31
August 2006. This is in accordance with the rules of the DataPro Group
Share Incentive Scheme.
SUBSEQUENT EVENTS
With effect from 11 September 2006, DataPro Group has acquired the
Namibian-based Definity Telecom (Proprietary) Limited ("Definity Telecom
Namibia") for a purchase consideration of R 4 million payable in cash
over a 12 month period, which was separately owned by the vendors of
Definity Telecom, which was acquired effective 07 July 2006 . All
conditions precedent to the transaction have been fulfilled. Definity
Telecom Namibia is one of two Least Cost Routing ("LCR") businesses that
supply telephony services to medium and large corporations in Namibia.
The acquisition is important for DataPro Group as an entry point into Sub-
Saharan Africa.
As announced on SENS on 15 November 2006, DataPro Group Limited entered
into an agreement dated 10 November 2006, in terms of which DataPro Group
will acquire 100% of the shares in and loan account claims against Orion
Telecom Investment Holdings (Proprietary) Limited ("Orion"). Orion is a
leading supplier of Least Cost Routing ("LCR") and VoIP telephony
services to corporate South Africa. The purchase price is R380 million to
be settled partly in cash and partly by way of a vendor placement of
DataPro Group shares to the market. The spilt of cash to vendor shares,
as well as the issue price of the shares, is still to be determined based
on the amount of loan funding to be raised and further details will be
announced on SENS in due course. The acquisition is regarded as being
substantial to DataPro Group and will materially improve the scale and
strategic position of DataPro Group. The effective date of the
acquisition is 01 December 2006. The proposed transaction remains subject
to conditions precedent, including all necessary regulatory and
shareholder approvals.
DIRECTOR CHANGES
JC Herbst resigned as director on 27 September 2005 and S Wentzel was
appointed as an executive director to the board on 24 November 2005. AP
van Marken was appointed to the board of directors as an executive
director on 7 July 2006. To better position the company for the
challenges ahead, the board of directors will be restructured imminently,
details will be announced as soon as they have been finalised.
DIVIDENDS
With the application of cash generated from operations being focussed on
the acquisition of annuity income streams and the continued investment in
VoIP, the directors have decided not to declare a dividend for the year
under review.
GENERAL
In accordance with AltX Listings Requirements, shareholders are advised
of the risks of investing in a company listed on the AltX and that the
JSE does not guarantee the viability or the success of a company listed
on the AltX. In terms of the JSE Listings Requirements, a Designated
Advisor has to be retained by the company. The Designated Advisor is
required, inter alia, to attend all board meetings held by the company to
ensure that all the JSE Listings Requirements and applicable regulations
are complied with, approve the financial director of the company and
guide the company in a competent, professional and impartial manner. If
the company fails to retain a Designated Advisor it must make
arrangements to appoint a new Designated Advisor within 10 business days,
failing which the company faces suspension of trading of its securities.
If a Designated Advisor is not appointed within 30 days of its
suspension, the company faces the termination of its listing without an
offer to minorities.
By order of the Board
YT Moerane DG Reed
Chairperson Chief Executive Officer
19 November 2006
Johannesburg
Registered Office
Arcay House, Number 3 Anerley Road, Parktown, Johannesburg,
2193
PO Box 62397, Marshalltown, Johannesburg, 2107
Directors
YT Moerane*, DG Reed, AP van Marken, GP Sweidan, S Wentzel, M
Krastanov*, MC Mogase* (Alternate CM Lister-James)
* Non-executive
Designated Advisor Transfer Office
Arcay Moela Sponsors Computershare Investor Services 2004
(Proprietary) Limited
Date: 20/11/2006 08:18:44 AM Produced by the JSE SENS Department
